Ways to build and maintain good credit

Financial analysts and consumer experts featured on 'CBS Saturday Morning' presented a comprehensive guide to building and maintaining credit scores for American consumers during a broadcast on March 30, 2024, aiming to help borrowers navigate high interest rates and tightening lending standards. The segment addressed the growing necessity for high credit ratings as the Federal Reserve's monetary policies have made borrowing for homes and vehicles increasingly expensive for those with subprime profiles. By outlining specific behavioral changes, the report provided a roadmap for viewers to improve their financial standing in an era of economic volatility. The experts emphasized that the most critical factor in a credit score is a consistent payment history, which accounts for approximately 35% of a consumer's total rating. To optimize this, the program recommended setting up automatic payments to ensure no deadlines are missed, as even a single late payment can cause a significant drop in points. Additionally, the segment highlighted the 'credit utilization ratio,' advising viewers to keep their total balance below 30% of their available credit limit. Lowering this ratio is often the fastest way to see a numeric increase in a score within a single billing cycle. Beyond basic maintenance, the report explored advanced strategies for those with thin credit files or those looking to rebuild after a financial setback. Suggestions included becoming an authorized user on a family member's long-standing account or utilizing 'rent reporting' services that count monthly utility and housing payments toward a credit profile. The broadcast concluded by warning against frequently closing old accounts or applying for multiple new credit lines in a short period, both of which can inadvertently shorten credit history length and create 'hard inquiries' that temporarily lower scores.